Senators blast House leaders over US Postal Service default

* Postal Service to default on payment due by midnight

* Lawmakers criticize House for not voting on postal bill

* House expected to leave for recess without acting

By Emily Stephenson

Aug 1 Hours before the U.S. Postal Service's
expected first-ever default on an obligation, senators blasted
the Republican-led House of Representatives for not advancing
legislation to overhaul the cash-strapped service before a
month-long recess.

The mail agency, which relies on the sale of stamps and
other products rather than taxpayer dollars, confirmed this week
that it could not make a $5.5 billion payment for future retiree
health benefits that is due by midnight on Wednesday.

Lawmakers have said for more than a year that they would
overhaul the struggling agency and help it avoid a default.

The Senate passed a bipartisan bill in April. But the House
plans to leave at the end of this week until after the September
3 Labor Day holiday without voting on postal legislation.

"Changes are needed now, but we cannot move forward without
action by the House of Representatives," Republican Senator
Susan Collins said in a statement on Wednesday. She and the
other three authors of the Senate bill urged the House to act.

"Failure to act is irresponsible and only ensures that the
financial free fall of the Postal Service will continue."

Defaulting on the payment, which goes into a fund for
retiree benefits years from now, will not disrupt mail delivery,
prevent USPS employees and suppliers from being paid or stop
benefits for current retirees, the Postal Service said.

But lawmakers, mailing industry lobbyists and other
observers have said default would signal to businesses that
Congress is not serious about fixing the Postal Service and
could speed efforts to find alternatives to mail.

The Postal Service has been losing billions of dollars each
year as the shift to email and online bill payment causes mail
volumes to fall and the retiree health payment and other
obligations drain its cash.

The health payment was initially due last September but was
delayed by Congress. The Postal Service expects to miss this
year's payment at the end of September and could face a cash
shortfall of about $100 million in mid-October.

The Postal Service has already taken steps to cut costs,
including offering buyouts, consolidating activities at
processing facilities and reducing post office hours.

But shortfalls are predicted again starting in the spring of
2013. The Postal Service says it needs to end Saturday mail,
reduce its workforce significantly, raise some prices and stop
making the payments for future retiree benefits.

The Senate bill would take some of those steps, allowing the
agency to dip into a retirement fund surplus to offer retirement
incentives to workers, ending Saturday mail after two years and
spreading out the prefunding payment over more years.

Senators and many House Democrats have pushed for the House
to vote on that bill. House Republican leaders say the bill
would buy the Postal Service more time, not solve its problems.

SLOW GOING

The leading House bill, from House Oversight Committee
Chairman Darrell Issa, would keep the prefunding payments, end
Saturday mail and establish oversight groups to cut costs and
close USPS facilities.

Some Democrats have said the bill would not get enough votes
to pass because many rural lawmakers from both parties oppose
ending Saturday mail and closing post offices. Others said the
House has been distracted by votes on divisive political issues
in the months leading up to the November election.

"Republicans in the House of Representatives have managed
30-odd votes on repealing health care reform and dozens more
protecting the interests of Big Oil and Wall Street, yet they
have not found time to ease the pressure on USPS,"
Representative Rosa DeLauro, a Democrat, said in a statement.

House Majority Leader Eric Cantor said last week that he was
continuing to work with Issa on his bill.

Issa blamed the impending default on the mail agency on
Tuesday, saying it failed to cut costs aggressively enough.

"The default by the Postal Service on its obligation to its
own employees and retirees follows decades of mismanagement, and
a willful blindness to fundamental changes in America's use of
mail," he said in a statement.

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